Slep-Tone sufficiently pled Elmwood’s alleged use in commerce by claiming that Elmwood used karaoke services as an inducement for its customers’ patronage and purchase of food and drink.

Slep-Tone sufficiently pled likelihood of confusion. It was sufficient to plead likely confusion of karaoke patrons, even though Slep-Tone’s direct customers were the “KJs” that purchase the tracks and play them for the consumers who do the karaoke, not those consumers. The two markets were sufficiently related, and Slep-Tone’s sales to KJs ultimately met the needs of the consumers it alleged were likely to be confused.

Pursuant to the Seventh Circuit’s Hard Rock test, a supplier of goods or services can be liable for contributory infringement even without an affirmative duty to prevent trademark violation. The supplier does have a duty “to understand what a reasonably prudent person would understand.” Based upon that standard, Slep-Tone sufficiently pled contributory infringement. Slept-Tone pled that Elmwood hires and may control its KJs and that Elmwood had actual knowledge of the infringing materials.

Elmwood’s nominative fair use defense failed. First, Northern District judges have held that nominative fair use could not be decided on a Rule 12(b) motion. Second, the defense failed substantively based upon Slep-Tone’s allegations. Slep-Tone alleged that the KJs used the SOUND CHOICE mark on bootleg versions of Slep-Tone’s tracks. That would suggest affiliation, sponsorship or endorsement, which makes the nominative fair use doctrine inapplicable.

Dastar was not applicable to this case. Slep-Tone was not using its SOUND CHOICE marks to control the content of the tracks. Slep-Tone’s claims were not focused upon the music. They were focused upon the use of Slep-Tone’s marks in connection with tracks allegedly from third parties.

Slep-Tone’s state law unfair competition law claims survived the motion to dismiss for the same reasons as the Lanham Act claims did.

The KJs were not necessary parties to the litigation. Slep-Tone’s claims could be addressed fully without the inclusion of the KJs.

Judge Guzman granted in part plaintiff Slep-Tone’s Fed. R. Civ. P. 12(b)(6) motion to dismiss defendant’s declaratory judgment of trademark invalidity, cancellation, antitrust and related Lanham Act and state law claims in this trademark dispute regarding a design trademark for SOUND CHOICE started by email Slep-Tone.

While plaintiff was required to disclose to the Trademark Office that it established commercial use base upon its third party licensees, it was “impossible” for the Court to determine based upon the limited information available to it whether or not plaintiff made a false representation to the Trademark Office.

The Court also held that defendant sufficiently pled the fraud-related claims pursuant to Fed. R. Civ. P. 9.Defendant, however, did not sufficiently plead common law fraud because it did not show how it was damaged by the alleged fraud.The filing of this suit was not sufficient damage.

Defendant’s antitrust claim failed because there were no allegations regarding Slep-Tone’s pricing practices as required for a Section 13(a) claim.

Finally, defendant’s abuse of process claim was dismissed because it lacked an allegation that plaintiff misused the Court’s processes.

Judge Tharp granted Defendants’ Fed. R. Civ. P. 12(b)(6) motion to dismiss Counts I and II for failure to state a claim under which relief can be granted. Count I alleged copyright infringement and Count II alleged violations of the Digital Millennium Copyright Act (“DCMA”).

The Court held Plaintiff’s complaint failed to state a claim for copyright infringement because it did not plausibly allege that the allegedly copyrighted phrase, “May the strength of the Holy Spirit be with you, guiding you every day of your life,” was protected by a valid copyright. The Court held the phrase was too common and unoriginal to receive copyright protection, was not protected by Plaintiff’s alleged copyright because the copyright registration was for an entire collection of poems that spanned six pages not for the single at-issue sentence, and there was no substantial similarity between the elements of Plaintiff’s and Defendant’s works.

The Court held Plaintiff’s complaint failed to state a claim under the DCMA because Copyright Management Information was not displayed on or with the allegedly copied works.

Judge Shadur granted defendant LeaseWeb USA (“LeaseWeb”) Fed. R. Civ. P. 12(b)(2) & (6) motion to dismiss for lack of personal jurisdiction and failure to state a claim. Plaintiff Flava Works pointed largely to Lease Web’s interactive website. But that website was not enough for general or specific jurisdiction. And LeaseWeb’s single Illinois customer was similarly insufficient. FlavaWorks offered no argument or proof that the customer was related to the alleged copyright infringement in this case.

The Court also dismissed LeaseWeb because FlavaWork’s complaint alleged no facts that would make it liable for copyright infringement.

Judge Shadur denied plaintiff Flava Works’ Fed. R. Civ. P. 12(b)(6) motion to dismiss defendant’s copyright infringement counterclaims. The fact that defendant did not plead the dates of the alleged copyright infringement was not fatal to the counterclaims. Flava Work’s statute of limitations argument was an affirmative defense and defendant was not required to plead facts refuting it as part of its counterclaims.

The Court also noted that pro se defendant’s periodic failure to appear for hearings has caused the case to move or not move in “fits and starts.” The Court “cautioned [defendant] . . . that such inattention could prove costly if repeated.”

Judge Kocoras denied defendants’ Beissbarth GmbH (“Beissbarth”) and Robert Bosch, GmbH’s (“Bosch Germany”) (collectively “German Defendants”) Fed. R. Civ. P. 12(b)(6) motion to dismiss. As an initial matter, the court denied plaintiff Snap-On’s argument that the motion was an improper Rule 12(b) motion pursuant to Rule 12(g)(2) because the German Defendants previously filed a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction. The Court ordered limited jurisdictional discovery prior to deciding that motion. That discovery had become “highly contested.” The German Defendants sought and received the Court’s leave to file this Rule 12(b)(6) motion because were the motion granted, it would have removed the need for that discovery. The Rule 12(b)(6) motion, therefore, was not filed for dilatory purposes and it promoted the policies behind Rule 12(g).

Of particular note, the Court held the following with respect to the Rule 12(b)(6) motion:

General allegations that all defendants directly infringed were sufficient. Snap-On was not required to make separate infringement allegations as to each defendant by name.

Snap-On’s claim that the German Defendants used the product in Illinois was sufficient to plead direct infringement.

Snap-On was not estopped from pursuing inducement claims based upon Snap-On’s statements to the Court regarding claiming direct infringement against the German Defendants. Those statements were about direct infringement as opposed to joint infringement claims, and had no bearing upon indirect infringement claims.

Snap-On’s allegations were sufficient to plead inducement. Snap-On alleged the German Defendants worked with defendant Robert Bosch USA to develop, price, and market the accused products and that Snap-On sent Bosch a warning letter prior to the US introduction of the accused product. Snap-On’s failure to use the words “induce” or “inducement” did not doom its claim because Snap-On still pled the elements of inducement.

Judge Finnegan denied individual defendant Lang’s Fed. R. Civ. P. 12(b)(1) & (6) motion to dismiss this Lanham Act suit. Lang argued that plaintiff Lang Exterior could not bring claims directly against Lang without piercing the corporate veil. But Seventh Circuit law allows personal claims against corporate officers where there was a “special showing” that the officer acted beyond the scope of her official duties. Plaintiff’s pleadings were sufficient to make that showing at the Rule 12(b) stage. Specifically, plaintiff pled:

Lang founded defendant Lang Windows and deliberately chose a name to confuse.

Lang personally emailed contacts using a pseudonym she used for plaintiff in order to confuse customers.

Lang created a website intending to confuse.

The Court also deemed waived Lang’s arguments reviewed for the first time on appeal.

Judge Coleman granted in part defendants’ Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiff Radiation Stabilization Solutions’ (“RSS”) claims in this patent infringement suit regarding technology for stabilizing irradiated targets. While defendant Cancer Treatment Centers of America (“CTCA”) was not properly named because its corporate designation – Inc. – was not listed, there was no need to dismiss CTCA. Instead, RSS was given leave to amend identifying CTCA’s correct corporate form.

RSS sufficiently pled induced infringement by making statements at least as detailed as Form 18 to the Federal Rules regarding the alleged underlying direct infringement. The complaint need not identify a specific direct infringer. While RSS did not allege it gave defendants notice of the infringement, the complaint itself served as notice. Similarly, RSS’s claims of intent starting from the date of the complaint were sufficient.

The Court dismissed RSS’s contributory infringement claims without prejudice. While RSS’s similar claims of direct infringement and intent were sufficiently pled, RSS made no statement at all that defendants’ products did not have substantial non-infringing uses.

Judge Darrah denied plaintiff’s application to proceed in forma pauperis and dismissed plaintiff’s complaint for failure to state a claim. Courts are required to dismiss a complaint when plaintiff seeks in forma pauperis status along with a complaint that fails to state a claim. Plaintiff’s complaint appears to sound in patent, trademarks and copyright. But it was “devoid of any substantive allegations” and, therefore, had to be dismissed.

The decision was issued about one week before the America Inventory Act was signed into law. But, McLean could not have challenged plaintiff’s claim because they were based upon expired patents. The Court refused to consider MacLean’s constitutional challenge to the False Marking Act.

Judge Der-Yeghiayan granted plaintiffs’ (collectively "Arcadia") motion to dismiss defendants’ (collectively "Moderna") counterclaims and denied Moderna’s motion to dismiss Arcadia’s claims in this Lanham Act case involving Arcadia’s TOPSHOP and Moderna’s TOP SHOP TV marks.In 2004, the parties entered a settlement agreement (the "Agreement") pursuant to which Moderna agreed not to use TOPSHOP to sell women’s clothing in any country.Arcadia alleged that Moderna violated the Agreement beginning in 2010 when it began selling women’s clothing in the US on Moderna’s topshoptv.com website.

Moderna’s Motion

Moderna argued that Arcadia did not plausibly plead a protectable mark because Moderna was the first user of the mark.But a motion to dismiss must assume the truth of Arcadia’s allegations and Arcadia plausibly pled that it was the first user of the mark.Additionally, Moderna’s arguments ignored that Arcadia’s complaint challenged the validity of Moderna’s TOPSHELF TV registration.

Arcadia sufficiently pled fame as part of its trademark dilution claim.While Arcadia did not parrot the language of the statute, it pled its TOPSHOP brands were "world famous", that the brand is one of the most successful in the world, that there have been millions of dollars in US sales and that the brand is regularly featured in US and international fashion and celebrity magazines and other media.

Arcadia’s Motion

The Court dismissed Moderna’s counterclaim for a declaratory judgment that it was the senior user of its TOP SHOP TV mark.Arcadia, however, had never challenged Moderna’s TOP SHOP TV mark.Arcadia’s only claims, in the suit or otherwise, were with respect to its TOPSHOP mark.As a result, any decision regarding the mark would be an impermissible advisory opinion.

The Court dismissed Moderna’s trademark misuse counterclaim because Moderna did not show that trademark misuse was an affirmative cause of action. Moderna was, however, allowed to amend its answer to add an affirmative defense of trademark misuse.

Judge Holderman denied defendants’ Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiff’s Lanham Act false designation of original claim in this trademark dispute involving funeral home trademarks – Lloyd Mandel Levayah Funerals (plaintiff) and Lloyd Mandel Mitzvah Memorial Funerals (defendant). Plaintiff properly pled that it had a protectable mark and that there was a likelihood of confusion as to defendants’ funeral services. The Court could not find the marks so dissimilar that plaintiff could not demonstrate a likelihood of confusion between the marks as a matter of law. The Court refused to consider defendants’ motion as to other claims because defendant did not argue or support its motion as to the other claims in its briefing.

Newt alleged that defendant Graphic Packaging ("GPI") falsely marked the products and sold them to the customer defendants. GPI made no allegations that the customer defendants marked the accused products. The customer defendants were, therefore, dismissed.

Further, all defendants were dismissed because Newt only made generalized intent allegations — e.g., that defendants were "sophisticated companies."

Finally, the Complaint was dismissed because Newt made only general allegations against all defendants, rather than particular allegations against each defendant.

Judge Coleman granted the individual defendants’ and Aslan Financial Group’s Fed. R. Civ. P. 12(b) motion to dismiss plaintiff Free Green Can’s trademark infringement and related state law claims. As an initial matter, the Court lacked subject matter jurisdiction as to all state law claims because while Free Green Can pled diversity of citizenship, it did not plead that the amount in controversy exceeded $75,000. Because Aslan Financial Group was only accused of state law claims, it was dismissed.

The federal trademark claims against the individual defendants were dismissed pursuant to Fed. R. Civ. P. 12(b)(6) because the individual defendants were accused of infringement based upon corporate acts of defendant Green Recycling Enterprises, of which each was an officer. But in order to state a claim for infringement, or any tort, by corporate officers or employees Free Green Can was required to allege each individual defendant had actively participated in the tortious acts. Because there were no such allegations, the infringement claims were dismissed.

The Court dismissed Healix’s claims for statutory damages on its copyright claims. The record showed that Healix filed for its copyright registrations after defendants began the alleged infringements, and more than three months after first publication. As a result, statutory damages were not recoverable. Healix could only receive actual damages. Furthermore, the Court denied Healix’s request to amend its pleadings to include a demand for actual damages because Healix had already filed four complaints in the case and never sought actual damages.

Trademark

Although sparse, Healix’s trademark claims were sufficiently plead. Defendants argued that Healix had not pled use in commerce. But it was sufficient that Healix pled that Defendants displayed Healix’s marks to the public and that Defendants allegedly copied Healix’s marks with intent to use them in selling Defendants services to the consuming public.

Tortious Interference

The Court took Defendants’ motion to dismiss Healix’s tortious interference claim under advisement, in favor of a fully briefed summary judgment motion on the issue that more fully set out the relevant facts.

The Court denied the defendant’s motion to dismiss defendant Metro Infectious Disease Consultants ("Metro"). Defendants argued that Metro was never specifically accused to have committed any acts in the complaint. Instead, Healix defined as a single entity three defendants, including Metro. But the Court held that it was sufficient in this instance for Healix to group Metro with two other defendants and make all allegations against Metro as part of the defined entity.

Judge Gottschall denied plaintiff Golden’s motion to dismiss or for a more definite statement pursuant to Fed. R. Civ. P. 12(b)(6) & (e) in this copyright dispute over real estate listings. Golden was not required to attach a copy of its copyright registration to its complaint. And while it was an "extraordinarily close question whether Golden’s "bare-bones" amended complaint satisfied Twombly, it did plead ownership of a registered copyright and it did plead that defendant allegedly copied the work without consent. Because Golden’s complaint was so bare-bones, defendant’s motion to dismiss was not in bad faith. The Court, therefore, denied Golden’s Fed. R. Civ. P. 11 motion regarding the motion to dismiss.

CDI alleged two bases of inequitable conduct. First, ADC allegedly intentionally failed to tell the examiner that certain limitations outlined in a series of bullet points were from a particular prior art reference. That claim filed because ADC had previously disclosed the prior art reference at issue to the examiner – once a reference is before an examiner, it cannot be found to have been withheld from the examiner. Second, ADC allegedly intentionally failed to disclose to the examiner that curling up of labels is an inherent characteristic of adhesive labels. But ADC had disclosed the inherent curling up by disclosing various prior art references regarding adhesive labels that taught the inherent curling up, combined with the examiner’s presumed experience in the art.

Walker Process Fraud Claim

Because CDI’s Walker Process claim was premised upon the alleged inequitable conduct, CDI’s Walker Process claim failed. The Court further noted that because inequitable conduct is a broader concept than Walker Process fraud, a party that fails to make its case for inequitable conduct, cannot make a Walker Process fraud claim.

Sham Litigation

CDI’s sham litigation claim was based upon allegations that ADC knew the patent was invalid based upon the Brady prior art reference, which was before the examiner, and because had ADC tested CDI’s accused labels, ADC would have realized its suit was baseless. Because the Brady reference was before the examiner, however, the Court could not find that the claim was "objectively baseless" as required for sham litigation. ADC could have reasonably believed that after the examiner considered Brady and granted ADC’s patent, ADC’s patent was in fact valid over Brady.

And ADC’s alleged failure to test the accused CDI product was not sufficient for a sham litigation claim. Sham litigation requires more than an unsuccessful suit. While CDI may eventually prove that it did not infringe, ADC’s failure to perform one test identified by CDI does "not permit the court to infer more than the mere possibility" that ADC’s suit was in bad faith.

The Court granted in part Plaintiff Optics Planet’s Fed. R. Civ. P. 12(b)(6) motion to dismiss. Initially, the Court noted that defendants’ tortious interference with prospective business relationships and with prospective economic advantage were not separate counts, but at most separate theories of recovery for a single court, calling the claims "Tweedledum and Tweedledee."

But the claims, whether single or multiple counts did not survive the competitor’s privilege. Defendants offered no evidence showing that plaintiff was doing anything except "feathering its own competitive nest". Defendants’ attempted monopolization claims were also dismissed because there was no evidence that plaintiff did anything but compete, and there was no indication that plaintiff would or could acquire power over market pricing.

Finally, the Court dismissed defendant’s accounting counterclaim to the extent the claim was based upon the dismissed counterclaims.

Judge Shadur sua sponte struck portions of defendants’ answer to plaintiff’s false patent marking case. First, the Court struck denials that followed defendants’ statements that they lacked information and belief. While a lack of information and belief acts as a denial, denying allegations as to which you cannot form a belief is "oxymoronic."

Second, the Court struck defendants’ improper affirmative defenses. Several of defendants’ affirmative defenses were improper because they had already been brought into issue by denying allegations in the complaint. The Court also struck defendants’ Fed. R. Civ. P. 12(b)(6) affirmative defense with leave to promptly file a "properly supported" motion to dismiss.

First, 15 U.S.C. § 1120 limited recovery to injuries sustained "in consequence" of a trademark registered by fraud or false reasons. The damages need not be to a trademark, as Clarin argued. Plaintiff’s alleged damage because its folding chairs were seized at the U.S. border based upon alleged infringement of Clarin’s trademark and plaintiffs allegedly lost business based upon the seizure. Those facts were sufficient to plead that Clarin was the proximate cause of plaintiff’s alleged damages.

Judge St. Eve granted in part plaintiff/counter-defendant Sloan’s Fed. R. Civ. P. 12 motions in the patent infringement case involving a flush valve handle assembly. The Court dismissed defendant/counter-plaintiff’s (collectively "Zurn") invalidity and noninfringement counterclaims to the extent they challenged patent claims other than those identified as allegedly infringed in Sloan’s complaint. The Court could have exercised jurisdiction over the counterclaims if Zurn had met the MedImmune standard independently for each of Sloan’s unasserted claims, but Zurn did not.

The Court denied Sloan’s Fed. R. Civ. P. 12(b)(6) motion to dismiss Zurn’s inequitable conduct counterclaim. Zurn met the materiality standard by pleading that Sloan should have known that admissions made in a prior, related reexamination proceeding were relevant to the Examiner in the later application.

The Court dismissed Zurn’s estoppel and misuse affirmative defenses. Each were pled in a single sentence and without particularized facts.

The Court also dismissed Zurn’s lack of actual notice affirmative defense. Zurn also denied Sloan’s actual notice allegation in its answer. Because actual notice was denied in the answer, it was not a proper affirmative defense. Finally, the Court dismissed Zurn’s noninfringement and exceptional case affirmative defenses. Neither was a proper affirmative defense.

Judge Dow granted in part plaintiffs’ motion to dismiss plaintiff’s inequitable conduct affirmative defenses and corresponding counterclaim in this patent case related to a treatment for hyperthyroidism. The Court dismissed defendants’ defenses and claims based upon infectious unenforceability. Defendants showed a relationship between the patents-in-suit and the earlier patents. But defendants did not meet the Fed.R.Civ.P. 9(b) pleading standards because they did not plead an "immediate and necessary" relationship between the patents-in-suit and the earlier patents in the family.

The Court denied the motion to dismiss as to prior art references that had been disclosed in earlier, related patent prosecutions, but not the prosecutions of the patents-in-suit. Defendants’ allegations were sufficient to allow the Court to infer that the prior art references were intentionally withheld to avoid rejections similar to those from the earlier prosecutions based upon that prior art. It did not matter that defendants did not allege that the prior art references were not cumulative. Rule 9(b) pleading is designed to put the opposing part on notice, not to require the recitation of "certain magic words." The Court dismissed defendants’ allegations regarding allegedly false statements to the PTO because other writings requested the applicant did not believe the statements to be false.

Defendants’ allegations regarding certain of plaintiffs’ undisclosed articles were sufficiently plead. Defendants identified specific articles written by patentee, and plead that they were relevant and that patentee failed to disclose them.

Finally, defendants sufficiently pled that plaintiff’s submitted article made misleading statements about the state of the art. Among other reasons, the Court noted that the truth of the contested statements could not be decided upon a motion to dismiss.

Judge Kocoras denied defendants (collectively “Lovemore”) Fed. R. Cir. P. 12(b)(2) motion to dismiss for lack of personal jurisdiction and Fed. R. Cir. P.12(b)(6) motion to dismiss the individual Lovemore defendants’ (collectively "Lovemore individuals") based upon the fiduciary shield doctrine in this Lanham Act dispute regarding plaintiff More Cupcake’s LOVE MORE mark for use on t-shirts. The Court did, however, grant Lovemore’s §1404 motion to transfer the case to the Eastern District of New York.

The parties agreed that the Court lacked general jurisdiction and argued only specific jurisdiction. The Court held that it had specific jurisdiction based upon the effects test. Lovemore’s alleged infringing acts were aimed at More Cupcakes in Illinois when Lovemore approved sales of allegedly infringing t-shirts to Illinois addresses after being warned of the alleged infringement in a Patent & Trademark Office proceeding and in settlement talks with More Cupcakes. Lovemore’s interactive website coupled with sales to Illinois also created specific jurisdiction. The fact that Lovemore’s most recent Illinois sale was to More Cupcakes’ counsel did not impact the analysis. Lovemore still knowingly sold product within Illinois.

The fiduciary shield doctrine did not apply to the individual defendants, who were both owners and operators of Lovemore. The fiduciary shield doctrine denies personal jurisdiction over individuals who contact Illinois solely for the benefit of their employees and not themselves. But the doctrine does not apply to owners of a company that have discretion over whether or not they do business in Illinois. As Lovemore owners, therefore, the Lovemore individuals are not protected by the fiduciary shield doctrine.

For similar reasons, while corporate officers are generally not personally liable for corporate trademark infringement claims, More Cupcakes’ claims against the Lovemore individuals survived. Both individuals were owners of Lovemore and the Complaint alleged that they personally directed the allegedly infringing acts.

Finally, the Court transferred the case to the Eastern District of New York. While More Cupcakes’ chosen forum deserves deference, the material events regarding the alleged infringement all occurred in New York where the t-shirts were designed, made, offered for sale and sold. And the Court held that the convenience factors, such as locations of documents and witnesses, were all neutral.

Judge Schenkier dismissed declaratory judgment defendant/counter-plaintiff KGK Synergize’s ("KGK") patent, trademark, Lanham Act and related state law claims against declaratory judgment plaintiff/counter-defendant SourceOne’s President for failure to meet the Twombly/Iqbal pleading standards.* The Court held that KGK had not sufficiently pled allegations to support the factors in the veil piercing analysis, in particular:

Allegations of episodes of "subpar record keeping" was not sufficient to prove SourceOne’s failure to observe corporate formalities;

Conclusory statements that SourceOne’s corporate officers were allegedly not given autonomy to make decisions were not sufficient to show that officers or directors were non-functioning;

The President and his family borrowing against a home equity loan to support SourceOne was not sufficient to show SourceOne was a "mere ‘dummy or sham.’"; and

the allegation that the President exerted significant control over SourceOne and personified the company was not sufficient to show a failure to maintain arm’s-length relationships among related entities.

The Court also held that KGK’s direct patent infringement claims against the President did not meet the Twombly/Iqbal pleading standards. KGK’s only allegations about the President were conclusory and tied to SourceOne’s alleged infringing actions. KGK did not plead sufficient facts about the President independent of SourceOne to support direct patent infringement claims.

* For more on the application of the Twombly pleading standards to patent cases, click here in the Blog’s archives.

R. David Donoghue is a patent trial attorney and partner with Holland & Knight’s Intellectual Property Group in Chicago. A trusted counselor to his retail and supply chain clients, Dave routinely speaks to groups of all sizes on an array of intellectual property topics. Chicago IP Litigation was created to help businesses understand their intellectual property rights and how to drive their cases to positive resolution.

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